Mitchell’s Golden Rule

Good fiscal policy exists when the private sector grows faster than the public sector, while fiscal ruin is inevitable if government spending grows faster than the productive part of the economy.

In some recent speeches, I’ve been experimenting with how to discuss this concept, and I’ve decided to be more concise.

I’ve also decided to be self-aggrandizing and call this Mitchell’s Golden Rule.

In some sense, this Golden Rule is a way of trying to help people understand why it is important to limit the growth of federal spending. And based on my recent speeches, it appears that linking government growth and private sector growth is very helpful.

Following the Golden Rule doesn’t prohibit tax increases, but it certainly means they will be far less likely. Simply stated, tax revenues tend to track economic performance. So if the private sector is growing faster than the government, that means tax revenues will be growing faster than government spending. So why raise tax rates?

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P.S. Regular readers know that I’ve already tried to create a legacy with the not-so-famous Mitchell’s Law, which points out that politicians often propose to expand government to ostensibly solve the messes created by previous expansions of government.

But there’s nothing new about Mitchell’s Law. Great economists such as Mises wrote about how one misguided government intervention often becomes the excuse for another foolish government intervention. I simply coined a phrase in hopes of helping to popularize the notion that one government mistake is often a precursor for another government mistake.

I’m not aware, however, of anybody that has stated that the key to good fiscal policy is restraining government spending so it grows slower than the private sector. Hence, my narcissistic decision to label this concept Mitchell’s Golden Rule.

Since you’ve already identified which of the two is “productive”…the goal should be to completely *eliminate* the unproductive. No reason to continue to squander resources. Too many problems that need to be solved productively.

You might’ve figured that your English professor friend would want to critique your language, right?
So, change “should” to “must.” To me, “should” makes it sound like a matter of persuasion, almost as if you believe it to be a matter of morality. “Must,” OTOH, implies a matter of fate, or cause and effect. You should be nice to everyone. You must be nice to your boss.You should point the hose away from your face. You must pun the gun away from your face.
But then again, it’s your rule.

The late economist Milton Friedman pointed out a golden law of taxation. The real, current tax burden is government spending. Government borrowing (delayed taxes) is merely finance. Government spending directs current, real resources into wasteful projects, and denies a flow of resources to businesses which would like to produce more value than they consume (create a profit).

Back when Kennedy took office and signed an EO permitting govt workers to unionize, 1 person in 19 worked in the public sector. For five decades the left has been growing the public sector (at the expense of all the productive sectors) as fast as it can (the better to offer cushy jobs to their loyal foot soldiers) to the point that we now have 22 million govt workers and 8 million in public education out of a total workforce of 150 million (although that’s been slipping since the Congress went Dem in 07).

The problem is that all jobs are not the same. All pay taxes, but jobs in the public sector get their salaries, taxes and benefits covered by tax revenue–they are tax consumers. Ultimately, workers in the private sector are the only true taxpayers–they have to earn a salary to pay the taxes to pay the salary to pay the income, property, sales and other taxes of a public worker.

Back then, we needed the taxes of 2 earners to cover the public employee. That left 16 out of 19 taxpayers to pay for everything else–Social Security, schools and libraries, satellites, highways and so on. That’s sustainable.

Now it’s down to 1 in 5, but public salaries and especially pensions are way up. Now it take 3 earners to cover the non-earner. That leaves 1 taxpayer in 5 to cover everything else, and it simply cannot be done. That explains how and why the Dems have saddled us with this enormous debt while feeding us the fictions that the size of government is nothing more than a matter of taste and that a job in the public sector helps the economy rather than burdens it. It also means any attempt to rev up the economy before this enormous structural problem begins to be dealt with is doomed.

What we must do in reasonably short order is shift 20-million jobs from the public to the private sector while also keeping taxes low and slashing regulatory oversight in order to rev up the economy to cover those jobs plus another 10+ million to take care of the current un- and under-employed. Can you say “privatize”? “Deregulate”? “Tax reduction”? “Drill, baby, drill”?

As Marco Rubio proclaims, what we need is more taxpayers… more *true* taxpayers, that is–earners in the private sector. Privatize ’em. Cut ’em. Whatever it takes. But we cannot run a $3.8B govt budget on top of $11.2B in private-sector earnings–it’s like asking a juggler to put down his clubs and toss anvils instead.

Mitchell’s Golden Rule could be taken as a fundamental law of _prescriptive_ politics.
Unfortunately, the fundamental law of _descriptive_ politics is Parkinson’s Law, which one could rephrase as follows:

In the long term, the government always grows faster than the private sector.

The exceptions are state collapses due to revolution or foreign conquest.
This law was actually discovered by Ibn Khaldun (if not earlier) which means that it applied to early Islamic states.
It seems that it also applied to the Roman Empire, to most if not all Chinese dynasties, and to the European Renaissance states.
Unfortunately, so far there has been no American exceptionalism in this law.

[…] be fair, a budget that allows federal spending to jump by 8 percent over the next four years would satisfy Mitchell’s Golden Rule. Barring an unexpected downturn, the private sector would be growing faster than the […]

[…] about 10 minutes. The key message was that government is too big and that the only solution is to limit government so that it grows slower than the private sector. GA_googleAddAttr("AdOpt", "1"); GA_googleAddAttr("Origin", "other"); […]

[…] from this new ECB research is that lawmakers – at the very least – need to follow Mitchell’s Golden Rule and make sure government spending grows slower than the private sector. Fortunately, that can […]

[…] because we had a period, beginning a couple of years earlier, during which politicians followed Mitchell’s Golden Rule and restrained government spending so that it grew slower than the private economy. The 1997 […]

Hmmmm…If taxes were tied to GDP then it would be in the interest of tax spenders (politicians) to facilitate an increase which would expand their power and influence while at the same time creating an environment conducive to business and entrepreneurship. WOW! That was easy.

[…] as Spain!), the first priority is to figure out some way of moving back in the right direction by restraining government so it grows slower than the private sector. Rate this: Share this:PrintEmailFacebookTwitterMoredeliciousDiggFarkLinkedInRedditStumbleUponLike […]

[…] as Spain!), the first priority is to figure out some way of moving back in the right direction by restraining government so it grows slower than the private sector. jQuery('#lazyload_post_0 img').lazyload({placeholder: […]

[…] But since government in the United States is now consuming more than 40 percent of GDP (about as much as Spain!), the first priority is to figure out some way of moving back in the right direction by restraining government so it grows slower than the private sector. […]

[…] But since government in the United States is now consuming more than 40 percent of GDP (about as much as Spain!), the first priority is to figure out some way of moving back in the right direction by restraining government so it grows slower than the private sector. […]

[…] The President’s budget, for instance, projects that the burden of federal spending will expand by less than 1 percent next year. That sounds like good news since it would satisfy Mitchell’s Golden Rule. […]

[…] The President’s budget, for instance, projects that the burden of federal spending will expand by less than 1 percent next year. That sounds like good news since it would satisfy Mitchell’s Golden Rule. […]

[…] The President’s budget, for instance, projects that the burden of federal spending will expand by less than 1 percent next year. That sounds like good news since it would satisfy Mitchell’s Golden Rule. […]

[…] A couple of weeks ago, I offered some guarded praise for Paul Ryan’s budget, pointing out that it satisfies the most important requirement of fiscal policy by restraining spending – to an average of 3.1 percent per year over the next 10 years – so that government grows slower than the productive sector of the economy (I call this my Golden Rule). […]

[…] A couple of weeks ago, I offered some guarded praise for Paul Ryan’s budget, pointing out that it satisfies the most important requirement of fiscal policy by restraining spending – to an average of 3.1 percent per year over the next 10 years – so that government grows slower than the productive sector of the economy (I call this my Golden Rule). […]

[…] A couple of weeks ago, I offered some guarded praise for Paul Ryan’s budget, pointing out that it satisfies the most important requirement of fiscal policy by restraining spending – to an average of 3.1 percent per year over the next 10 years – so that government grows slower than the productive sector of the economy (I call this my Golden Rule). […]

[…] The President’s budget, for instance, projects that the burden of federal spending will expand by less than 1 percent next year. That sounds like good news since it would satisfy Mitchell’s Golden Rule. […]

[…] Even though I favor radical reductions in the burden of government, I’ve made the point that good fiscal policy merely requires that government spending grow slower than the private sector – what I call Mitchell’s Golden Rule. […]

[…] Even though I favor radical reductions in the burden of government, I’ve made the point that good fiscal policy merely requires that government spending grow slower than the private sector – what I call Mitchell’s Golden Rule. […]

[…] Even though I favor radical reductions in the burden of government, I’ve made the point that good fiscal policy merely requires that government spending grow slower than the private sector – what I call Mitchell’s Golden Rule. […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve […]

Awesome and profound! Wisdom is not just knowing what is right, but communicating it in an efficient way that everyone can understand.

Bypassing your rule leads to fiscal corruption, bankruptcy and a dictatorship. Greece and Spain are losing their sovereignty to Germany, because they need someone to fund their unrestrained appetite. The United States is slowly losing their sovereignty to China.

[…] as Spain!), the first priority is to figure out some way of moving back in the right direction by restraining government so it grows slower than the private sector. Daniel J. Mitchell • February 9, 2012 @ 2:59 pm Filed under: General; […]

[…] ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and […]

[…] My message, by the way, was very simple. Higher taxes won’t work. The “growth” vs. “austerity” debate in Europe is really a no-win fight between those who want higher spending vs. those who want higher taxes. The only good answer is to restrain spending with…you guessed it, Mitchell’s Golden Rule. […]

[…] My message, by the way, was very simple. Higher taxes won’t work. The “growth” vs. “austerity” debate in Europe is really a no-win fight between those who want higher spending vs. those who want higher taxes. The only good answer is to restrain spending with…you guessed it, Mitchell’s Golden Rule. […]

[…] than the private sector (with the kind of humility you only find in Washington, I call this “Mitchell’s Golden Rule“). The entitlement reforms in the Ryan budget would be a good start, along with some […]

[…] than the private sector (with the kind of humility you only find in Washington, I call this “Mitchell’s Golden Rule“). The entitlement reforms in the Ryan budget would be a good start, along with some much-needed […]

[…] does create jobs? I explain we need to shrink the burden of government and I cite my favorite Golden Rule about the importance of making sure the productive sector of the economy grows faster than the […]

[…] – as I explained in my post about Cyprus – that bad things happen sooner or later if government spending grows faster than the economy’s productive sector. Rate this:Share this:PrintEmailFacebookTwitterMoredeliciousDiggFarkLinkedInRedditStumbleUponLike […]

[…] – as I explained in my post about Cyprus – that bad things happen sooner or later if government spending grows faster than the economy’s productive sector. Daniel J. Mitchell • July 11, 2012 @ 1:53 pm Filed under: Government and […]

[…] Even though I favor radical reductions in the burden of government, I’ve made the point that good fiscal policy merely requires that government spending grow slower than the private sector – what I call Mitchell’s Golden Rule. […]

[…] to grow faster than the government. I’ve humbly decided to refer to this simple principle as Mitchell’s Golden Rule, and have pointed out that bad things happen when governments violate this common-sense […]

[…] to grow faster than the government. I’ve humbly decided to refer to this simple principle as Mitchell’s Golden Rule, and have pointed out that bad things happen when governments violate this common-sense […]

[…] to grow faster than the government. I’ve humbly decided to refer to this simple principle as Mitchell’s Golden Rule, and have pointed out that bad things happen when governments violate this common-sense […]

[…] does create jobs? I explain we need to shrink the burden of government and I cite my favorite Golden Rule about the importance of making sure the productive sector of the economy grows faster than the […]

[…] the CALPERS report that said that they had 1-year return of only 1%, sequestration, and Mitchell’s Golden Rule. For those unfamiliar with Mitchell’s Golden Rule it states that “the private sector should […]

[…] the burden of government spending grows slower than the economy’s productive sector (i.e., Mitchell’s Golden Rule), then deficits and debt fall. To be blunt, if you cure the disease, the symptoms automatically […]

[…] I agree with much of the column, particularly the credit to the Tea Party and the indirect reference (“restraining governments that were growing far more rapidly than the private economy”) to Mitchell’s Golden Rule. […]

[…] the burden of government spending grows slower than the economy’s productive sector (i.e., Mitchell’s Golden Rule), then deficits and debt fall. To be blunt, if you cure the disease, the symptoms automatically […]

[…] Mitchell’s Golden Rule « International Liberty. Share this:TwitterFacebookLinkedInStumbleUponEmailPrintLike this:LikeBe the first to like this. This entry was posted in Dan Mitchell, Economics by michaelacummings. Bookmark the permalink. […]

[…] in this interview for Fox Business News, is that nations get in trouble because they violate Mitchell’s Golden Rule. In other words, the burden of government spending climbs faster than the private sector’s […]

[…] in this interview for Fox Business News, is that nations get in trouble because they violate Mitchell’s Golden Rule. In other words, the burden of government spending climbs faster than the private sector’s […]

[…] in this interview for Fox Business News, is that nations get in trouble because they violate Mitchell’s Golden Rule. In other words, the burden of government spending climbs faster than the private sector’s […]

[…] than the private sector (with the kind of humility you only find in Washington, I call this “Mitchell’s Golden Rule“). The entitlement reforms in the Ryan budget would be a good start, along with some much-needed […]

[…] My message, by the way, was very simple. Higher taxes won’t work. The “growth” vs. “austerity” debate in Europe is really a no-win fight between those who want higher spending vs. those who want higher taxes. The only good answer is to restrain spending with…you guessed it, Mitchell’s Golden Rule. […]

[…] P.S. Don’t forget that revenues also are projected to rise dramatically over the next 10 years, even if the 2001 and 2003 tax cuts are made permanent. All that’s actually needed to balance the budget is modest spending restraint, restraining outlays so they grow by an average of 2.5 percent. In other words, good things happen if policy makers comply with Mitchell’s Golden Rule. […]

[…] P.P.P.S. There are some good lessons to be learned from other nations, as shown in this video. And if you pay attention to the details in that video, you’ll notice that the key to good fiscal policy is…drumroll please…following Mitchell’s Golden Rule. […]

[…] P.P.P.S. There are some good lessons to be learned from other nations, as shown in this video. And if you pay attention to the details in that video, you’ll notice that the key to good fiscal policy is…drumroll please…following Mitchell’s Golden Rule. […]

[…] taxes usually are a substitute for the real solution of spending restraint (i.e., Mitchell’s Golden Rule). Politicians oftentimes refuse to reduce the burden of government spending because of an […]

[…] taxes usually are a substitute for the real solution of spending restraint (i.e., Mitchell’s Golden Rule). Politicians oftentimes refuse to reduce the burden of government spending because of an […]

reply to Dennis Edwall
“Good in principle, but the problem is that these things are difficult to measure.”

Wrong, a very simple measure already exists. It is the % of Gov spending vs GDP. It that measure goes up, it means gov is expanding faster than the economy. Right now under Obama it is grossly and historically bloated, at the highest level since WW2, at 24%. Under Bush it was a more healthy 20%, and under Clinton it was at a very healthy 18%. It should also be noted that when it was at 18% we had both a healthy economy and a balanced budget.
Romney proposed in his campaign to cut spending enough to bring it back to a healthier 20% in 4 yrs, but he lost. Now Obama is increasing taxes, with zippo in spending cuts, in the final fiscal cliff deal, and promisses more spending hikes to come. We were foolish enough to elect Obama, he will do nothing but spend, and when we follow Greece, the dems will probably still be blaming Bush.

[…] slay the monster in today’s cartoon, we need to copy the very successful Swiss Debt Brake and restrain the growth of government spending. And to make sure we abide by that cap, we’ll need some sensible entitlement […]

[…] to slay the monster in today’s cartoon, we need to copy the very successful Swiss Debt Brake and restrain the growth of government spending. And to make sure we abide by that cap, we’ll need some sensible entitlement […]

[…] No, I’m not talking about creating a libertarian Nirvana, with the federal government consuming only three percent of economic output. But I think we can at least hold the line and prevent government from becoming bigger than it is today. Sort of a watered-down version of Mitchell’s Golden Rule. […]

[…] does create jobs? I explain we need to shrink the burden of government and I cite my favorite Golden Rule about the importance of making sure the productive sector of the economy grows faster than the […]

[…] taxes usually are a substitute for the real solution of spending restraint (i.e., Mitchell’s Golden Rule). Politicians oftentimes refuse to reduce the burden of government spending because of an […]

[…] the burden of government spending grows slower than the economy’s productive sector (i.e., Mitchell’s Golden Rule), then deficits and debt fall. To be blunt, if you cure the disease, the symptoms automatically […]

[…] That’s all fine and well, but good fiscal policy is achieved by reducing the burden of government spending, and that means that restraining the budget so that federal outlays grow slower than the private sector. […]

[…] is the chart I created a couple months ago to show that relationship. For those unfamiliar with Mitchell’s Golden Rule, “the private sector should grow faster than the government”. I still prefer the stronger form […]

[…] words, the government growth rate has been faster than that of the private sector, going counter to Mitchell’s Golden Rule. The fundamental flaw in this model is the fatal conceit of politicians who believe that they can […]

[…] relative to the productive sector of the economy. I wasn’t narcissistic enough to say “Mitchell’s Golden Rule” on air, but I did say that good fiscal policy occurs when government grows slower than the […]

[…] relative to the productive sector of the economy. I wasn’t narcissistic enough to say “Mitchell’s Golden Rule” on air, but I did say that good fiscal policy occurs when government grows slower than the […]

[…] burden of government spending. I want politicians to cut spending (or at least make sure it grows slower than the productive sector of the economy). And rather than increasing the tax burden, I want them to lower rates and reform punitive tax […]

[…] burden of government spending. I want politicians to cut spending (or at least make sure it grows slower than the productive sector of the economy). And rather than increasing the tax burden, I want them to lower rates and reform punitive tax […]

[…] pace and some at a slower pace. But all of them are in deep trouble because they don’t follow my Golden Rule about restraining the burden of government spending so that it grows slower than the private […]

[…] pace and some at a slower pace. But all of them are in deep trouble because they don’t follow my Golden Rule about restraining the burden of government spending so that it grows slower than the private […]

[…] to have government grow slower than the private sector. To determine whether states are satisfying my Golden Rule, you need the Tax Foundation data on spending, but it needs to be augmented by similar data for […]

[…] to have government grow slower than the private sector. To determine whether states are satisfying my Golden Rule, you need the Tax Foundation data on spending, but it needs to be augmented by similar data for […]

[…] No, I’m not talking about creating a libertarian Nirvana, with the federal government consuming only three percent of economic output. But I think we can at least hold the line and prevent government from becoming bigger than it is today. Sort of a watered-down version of Mitchell’s Golden Rule. […]

[…] taxes usually are a substitute for the real solution of spending restraint (i.e., Mitchell’s Golden Rule). Politicians oftentimes refuse to reduce the burden of government spending because of an […]

[…] totally irrational. I’ve pointed out, for instance, that we can make progress if we simply restrain the growth of government so that it expands slower than the private sector. Surely that’s not asking too much, right? Heck, we’ve done that for the past two […]

[…] of economic output – should be the goal of fiscal policy. That’s simply another way of stating my Golden Rule. And there’s a growing body of academic evidence showing that reducing the size of government is […]

[…] see from this chart, lawmakers in this island nation have done a reasonably good job of satisfying Mitchell Golden Rule over the past couple of years. Economic output has been growing by 6.1 percent annually, while […]

[…] slowdown that substantially reduced government spending as a share of GDP. In other words, my Golden Rule was in effect! If we could maintain this approach for a few more years, we’d quickly have a […]

[…] relative to the productive sector of the economy. I wasn’t narcissistic enough to say “Mitchell’s Golden Rule” on air, but I did say that good fiscal policy occurs when government grows slower than the […]

[…] pace and some at a slower pace. But all of them are in deep trouble because they don’t follow my Golden Rule about restraining the burden of government spending so that it grows slower than the private […]

[…] to move policy in the right direction rather than the wrong direction. That’s why I developed my Golden Rule, which is designed to show that progress is possible so long as we simply make sure the private […]

[…] constrain the public sector so that it grows at 2.3 percent annually, we’ll be complying with my Golden Rule and the burden of government spending will continue to slowly but surely shrink as a share of […]

[…] First, there is no need to cut spending. It would be good to impose genuine spending cuts, to be sure, but progress is possible so long as spending grows slower than revenue. And the real goal should be to make sure that spending grows slower than the private sector. […]

“A government that grows/spends more than its private sector cannot by any stretch of the imagination be a Republic; it is something much more sinister and oppressive.” –Doktor Thomas’ re-iteration of the blatantly obvious often confounded as appearing forgotten, invisible or unimportant, especially to pro(re)gressives.

[…] My purpose was to show that some sort of long-run spending cap (such as limiting outlays so they can’t grow faster than population plus inflation) is the best way of achieving good fiscal outcomes. […]

[…] activities to unproductive. The economist Dan Mitchell has proposed what he calls the “Golden Rule of Fiscal Policy,” which is: “The Private Sector should Grow Faster than Government.” This is not […]

[…] I would like to think I played a very tiny role in this development. My friend Mads Lundby Hansen from Denmark’s free-market think tank (CEPOS) took part in a debate before the election and promoted the Golden Rule. […]

[…] see whether government spending is falling as a share of economic output (i.e., are they following Mitchell’s Golden Rule). But you can’t cherry pick the data. For instance, look at this chart from Eurostat. If 2009 […]

[…] see whether government spending is falling as a share of economic output (i.e., are they following Mitchell’s Golden Rule). But you can’t cherry pick the data. For instance, look at this chart from Eurostat. If 2009 is […]

[…] advisers also understand. Take a look at these passages from their report. Citing a version of my Golden Rule, they point out that huge savings are possible simply by reducing how fast the government’s […]

[…] And kudos to the IMF for supporting market-driven competition. Even more important, though, the international bureaucracy recognizes that the key is to limit the government’s health care spending to the growth of the private economy (sort of a a healthcare version of Mitchell’s Golden Rule). […]

[…] First, government is growing faster than the private sector. The fact that government spending now consumes twice as much of the economy’s output today as it did back in 1988 means that politicians have been repeatedly (and vigorously!) violating my Golden Rule. […]

[…] allowing the burden of government spending to grow faster than the private economy, thus violating my Golden Rule, honest leftists will admit that’s true but then challenge me on what should happen […]

[…] and put in place some sort of spending cap (a good one that ensures that the burden of government expanded slower than the private sector), then red ink quickly would fall and investors would be much less fearful […]

[…] percent annually according to IMF data. And because that complies with my Golden Rule (meaning that government spending is growing slower than the private sector), the net result according to OECD data is that the burden of government spending is shrinking […]

[…] and the economy, the benefit of a spending cap (assuming it is well designed so that it satisfies Mitchell’s Golden Rule) is that annual budgetary increases are lower than the long-run average growth of the private […]

[…] save ourselves from that fate. And it’s not complicated. Just make sure government spending grows slower than the private economy, which will only be possible in the long run if lawmakers reform […]

[…] and put in place some sort of spending cap (a good one that ensures that the burden of government expanded slower than the private sector), then red ink quickly would fall and investors would be much less fearful […]

[…] Indeed, tax hikes presumably will accelerate the problems by weakening economic performance, creating an even bigger gap between the growth of government spending and the growth of productive output. Sort of a double violation of my Golden Rule. […]

[…] lower tax rates generally are fighting to reduce the growth of government, preferably so it expands slower than the private sector. Advocates of tax hikes, by contrast, want to enable a larger burden of government spending. What […]

[…] Ever since 2010, the burden of government spending has expanded by an average of about 1.6 percent annually. Spending is still growing, needless to say, but the private sector has been growing faster, so British policymakers have been satisfying my golden rule. […]

[…] Ever since 2010, the burden of government spending has expanded by an average of about 1.6 percent annually. Spending is still growing, needless to say, but the private sector has been growing faster, so British policymakers have been satisfying my golden rule. […]

[…] And since the private economy has expanded at a faster pace, this period of restraint has satisfied my golden rule. In other words, the public sector – though still very large – is now a smaller burden […]

[…] Since 2010, the burden of government spending has expanded by an average of about 1.6 percent annually. Spending is still growing, needless to say, but the private sector has been growing faster, so British policymakers have been satisfying my golden rule. […]

[…] since the private economy has expanded at a faster pace, this period of restraint has satisfied my golden rule. In other words, the public sector – though still very large – is now a smaller burden on the […]

[…] I’ll close by observing that we shouldn’t fixate on balancing the budget in any particular year. It’s much more important to shrink the burden of government spending. And that happens when the private sector grows faster than the federal budget. […]

[…] I’ll close by observing that we shouldn’t fixate on balancing the budget in any particular year. It’s much more important to shrink the burden of government spending. And that happens when the private sector grows faster than the federal budget. […]